With the VIX sinking there is nobody better to guide us through a trade on the VIX then todays contributor, COT staffer J.W. Jones.....
One of the newest option products to appear in our universe as an options trader is the option series designed to trade the volatility index (VIX). The VIX is a measurement of the implied volatility of the S&P 500 index.
To review quickly, the implied volatility of an options series is reflective of the aggregate market opinion of the future volatility of a given underlying asset. In terms of the Volatility Index, the price is the current market opinion of the future volatility in the S&P 500 Index over the next 12 months.
As are all attempts to predict the future, this value does not always reflect accurately the actual volatility as it plays out prospectively, but at a practical level it is the best we can do. As sage philosophers have long noted, “the future isn’t what it used to be.”
The importance for traders is the well established and generally known inverse correlation between prices for the given underlying and the measure of implied volatility, in this case our VIX value. What is typically less known is the fact that levels of implied volatility correlate even more closely to the velocity of the price move of the underlying asset in question.......Read J.W.'s entire article and check out the charts
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Wednesday, January 9, 2013
Baker Hughes Announces December 2012 Rig Counts
The average U.S. rig count for December 2012 was 1,784, down 25 from the 1,809 counted in November 2012 and down 219 from the 2,003 counted in December 2011. The average Canadian rig count for December 2012 was 353, down 31 from the 384 counted in November 2012 and down 76 from the 429 counted in December 2011.
The worldwide rig count for December 2012 was 3,390, down 70 from the 3,460 counted in November 2012 and down 222 from the 3,612 counted in December 2011.
Here is the Baker Hughes official release and charts
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Monday, January 7, 2013
EIA Video: Cumulative Natural Gas Wells Drilled in Pennsylvania
Between 2009 and 2011, Pennsylvania's natural gas production more than quadrupled due to expanded horizontal drilling combined with hydraulic fracturing. This drilling activity, which is concentrated in shale formations that cover a broad swath of the state, mirrors trends seen in the Barnett shale formation in Texas.
The animation illustrates Pennsylvania's relatively recent transition from conventional vertical wells (black diamonds) to horizontal wells (red diamonds), drilled mostly in sections of the Marcellus, Utica, and Geneseo/Burket shale formations located in the northeast and southwest portions of the state. The animation also shows that as horizontal drilling increased, the number of vertical wells [which are typically less productive] fell, resulting in an overall decline in the state's new well count.
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The animation illustrates Pennsylvania's relatively recent transition from conventional vertical wells (black diamonds) to horizontal wells (red diamonds), drilled mostly in sections of the Marcellus, Utica, and Geneseo/Burket shale formations located in the northeast and southwest portions of the state. The animation also shows that as horizontal drilling increased, the number of vertical wells [which are typically less productive] fell, resulting in an overall decline in the state's new well count.
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Saturday, January 5, 2013
A Technical Update on the Mini Crash in GOLD
If you follow one trader for gold trades make it COT staffer David Banister. Today David shows us what he sees "in the waves"......
Let’s make one thing clear; nobody I know including myself predicted that Gold would drop from 1690 to 1625 inside of 48 hours this week. That was not in the charts and so I won’t even pretend I was going to see that train coming through the tunnel.
With that said, let’s try to let the dust settle but take a look objectively at some possibilities.
1. We all know that some FOMC minutes released did in fact cause some major downside in GOLD based on potential for eventual end to QE in the US down the road. It did cause stops to trigger, probably some margin calls, and then more stops creating a mini crash of near 4% on the Metal.
2. The ABC pattern appeared to be completed at 1634 last week, especially when we rallied over 1681 pivot. A brief dip to 1625 spot took place this morning early, and we now trade again around the 1631 pivot.
What are the technical options?
Well if we stick with traditional Elliott Wave Theory, we can see a potential 3-3-5 pattern still unfolding and wave 5 of C is now in play. 3-3-5 patterns have 3 waves down, 3 up, then 5 down to complete the entire ABC Structure.
To confirm this, we will want to see GOLD bottom here fairly soon in wave 5 of C.
Below is the updated chart of GLD ETF showing you this pattern. It’s the best I can do right now. I will keep you updated as things unfold. To be sure, I count this as cycle year 13 in the Gold bull market and I had Gold peaking in June of 2013 at 2280-2400 ranges per ounce, but we will have to see now if that is still valid or not based on whether this C wave can hold and reverse hard soon.
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Let’s make one thing clear; nobody I know including myself predicted that Gold would drop from 1690 to 1625 inside of 48 hours this week. That was not in the charts and so I won’t even pretend I was going to see that train coming through the tunnel.
With that said, let’s try to let the dust settle but take a look objectively at some possibilities.
1. We all know that some FOMC minutes released did in fact cause some major downside in GOLD based on potential for eventual end to QE in the US down the road. It did cause stops to trigger, probably some margin calls, and then more stops creating a mini crash of near 4% on the Metal.
2. The ABC pattern appeared to be completed at 1634 last week, especially when we rallied over 1681 pivot. A brief dip to 1625 spot took place this morning early, and we now trade again around the 1631 pivot.
What are the technical options?
Well if we stick with traditional Elliott Wave Theory, we can see a potential 3-3-5 pattern still unfolding and wave 5 of C is now in play. 3-3-5 patterns have 3 waves down, 3 up, then 5 down to complete the entire ABC Structure.
To confirm this, we will want to see GOLD bottom here fairly soon in wave 5 of C.
Below is the updated chart of GLD ETF showing you this pattern. It’s the best I can do right now. I will keep you updated as things unfold. To be sure, I count this as cycle year 13 in the Gold bull market and I had Gold peaking in June of 2013 at 2280-2400 ranges per ounce, but we will have to see now if that is still valid or not based on whether this C wave can hold and reverse hard soon.
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Check out our free video series "Simpler Options Trading Strategies"
Friday, January 4, 2013
Why the 1470-1474 area on the SP 500 is extremely important for Bulls
The SP 500 has been in a potential 5 wave rally going all the way back to October 2011 lows of 1074. This type of 5 wave rally is common in a Bull Market, but must be watched closely as it could also signal another large correction just around the corner from current 1464 levels on the SP 500 Index. Once you complete a 5 wave bullish pattern, there is commonly a 3 wave corrective decline, therefore determining where those key pivot points are is crucial for market watchers.
If we take a look at the length of the 5 waves in the Rising Wedge pattern from the October 2011 lows of 1074 below, and compare them with other waves 2-5, we can see several fibonacci fractal relationships amongst all of them. This is one of the clues I look for when trying to analyze pivot points and knowing at least what I should be watching for further clues.
In most cases, wave 3 is commonly the largest of a 5 wave structure, but that does not preclude wave 1 from being the largest in the series. To wit, recall the nasty decline into October 2011 that spurred the next big market advance of about 350 points off the bottom. When you have a significant decline preceeding the early stages of a 5 wave advance, often the first wave in the pattern is in fact the largest, which may be the case here.
Let’s take a look at a possible 5 wave count just so we know what to be aware of :
Wave 1: That 350 point advance was a possible wave 1 off the 1074 lows of Oct 2011.
Wave 2: managed to retrace 155 points of that advance into June 2012, a common wave 2.
Wave 3: rallied to the 1474 pivot, which was a 207 point rally. 207 points is about 61% fibonacci relationship to wave 1′s 350 point advance, again another clue.
Wave 4: dropped as we know from 1474-1344, or 130 points. 130 points is also about 61% of Wave 3′s prior advance on the downside.
Wave 5: Theoretically this wave 5 is now from 1343, and if we took 61% of wave 3 advance and add it to 1343, we come up with about 1470.
1470 would then be a double top in the market, stop wave 5 in its tracks… and be followed by a large correction.
So with the above in mind, we advise watching 1470-74 with keen interest as the market will want to take this area out with authority to continue the intermediate bull run. If not, we could be in for some downside trouble…
Don't miss a single Elliot Wave Trading article from David Banister, consider joining us for free weekly reports. Just visit Market Trend Forecast or better yet sign up for a 33% discount on a one year subscription to Davids complete service today.
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If we take a look at the length of the 5 waves in the Rising Wedge pattern from the October 2011 lows of 1074 below, and compare them with other waves 2-5, we can see several fibonacci fractal relationships amongst all of them. This is one of the clues I look for when trying to analyze pivot points and knowing at least what I should be watching for further clues.
In most cases, wave 3 is commonly the largest of a 5 wave structure, but that does not preclude wave 1 from being the largest in the series. To wit, recall the nasty decline into October 2011 that spurred the next big market advance of about 350 points off the bottom. When you have a significant decline preceeding the early stages of a 5 wave advance, often the first wave in the pattern is in fact the largest, which may be the case here.
Let’s take a look at a possible 5 wave count just so we know what to be aware of :
Wave 1: That 350 point advance was a possible wave 1 off the 1074 lows of Oct 2011.
Wave 2: managed to retrace 155 points of that advance into June 2012, a common wave 2.
Wave 3: rallied to the 1474 pivot, which was a 207 point rally. 207 points is about 61% fibonacci relationship to wave 1′s 350 point advance, again another clue.
Wave 4: dropped as we know from 1474-1344, or 130 points. 130 points is also about 61% of Wave 3′s prior advance on the downside.
Wave 5: Theoretically this wave 5 is now from 1343, and if we took 61% of wave 3 advance and add it to 1343, we come up with about 1470.
1470 would then be a double top in the market, stop wave 5 in its tracks… and be followed by a large correction.
So with the above in mind, we advise watching 1470-74 with keen interest as the market will want to take this area out with authority to continue the intermediate bull run. If not, we could be in for some downside trouble…
Don't miss a single Elliot Wave Trading article from David Banister, consider joining us for free weekly reports. Just visit Market Trend Forecast or better yet sign up for a 33% discount on a one year subscription to Davids complete service today.
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Wednesday, January 2, 2013
The Fiscal Pop-N-Drop for Equities – Look Out
My to the point answer is “Yes” but there will be some bumps and navigating positions along the way.
Looking at the charts below you will notice how stocks are trading up over 4% in two trading sessions and several indicators and technical resistance levels are now being tested. Naturally when several resistance levels across multiple time frames, cycles and indicators we must be open to the idea that stocks could pause or pullback for a few days before continuing higher.
Here is a quick snapshot of charts we follow closely to help determine short term overbought and oversold market conditions.....Click here to check out the charts for "The Fiscal Pop-N-Drop for Equities – Look Out"
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Monday, December 31, 2012
Copper ETFs and Copper Stocks About To Move Big
The long term monthly chart of the copper ETF JJC shows a potential cup and handle pattern accompanied with bullish volume characteristics. Last year copper traded sideways in a narrowing range. This type of price action tends to bore traders and investors forcing them to look elsewhere for new to trades. The saying is “If the market doesn’t shake you out, it will wait you out”
You can see on the monthly chart that the interest in this commodity diminished. You can tell because of the sideways movement and declining volume. I like to focus on investments which are out of favor but are showing signs of another big trend starting. getting on the train before it leaves the station can make for a fun ride.
Just click here to take a look at the charts, analysis and our best copper stock setup
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2013 Forecast – Tis The Season To Drink & Own Coffee
Coffee prices have fallen more than 50% since 2010 which can be seen through the coffee exchange traded fund symbol: JO. This investment seeks to replicate the returns that are potentially available through an unleveraged investment in coffee futures contracts as well as the rate of interest that could be earned on cash collateral invested in specified Treasury Bills.
Weekly, Hourly and Seasonal chart of JO Coffee Exchange Traded Fund
The top weekly chart shows my price targets for 2013 while the lower hourly chart shows strong on balance volume meaning big money is slowly building a long position in coffee. The small white chart is the seasonal chart of coffee futures showing prices historically rise from January–March, then a correction followed by another rally in to May.
Coffee prices are still in a down trend but it looks as though the end is near and if played properly it could provide up to 100% return on your capital in 2013.
Coffee Futures Monthly Long Term Chart
This chart gives you a bird’s eye view on where coffee prices are trading in the big picture scheme of things.
JO Coffee ETF VS. SBUX Starbucks Share Price:
Lower coffee bean prices has helped lift share prices of coffee companies like Starbucks: SBUX, Coffee Holdings Co.: JVA, Coffee Roasters Inc.: GMCR, and PEET’s Coffee: PEET. But cheap coffee may not be around that much longer and the lower earnings for coffee brewers may be closer than most may think.
2013 Caffeine Conclusion:
In short, I have been watching coffee prices for a bottoming pattern for months and I now feel it is getting really close to a bottom and it could be a great trade and investment in the new year. As for companies like Starbucks it will likely not have much of an affect on the bottom line until the second half of the year though it is something to keep an eye on during earning seasons.
If you want my trading and investing ideas each week along with trade alerts for ideas like this then join my newsletter today at The Gold & Oil Guy.com
Chris Vermeulen
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Sunday, December 30, 2012
The New Era of Oil Renaissance....Where Nuclear Failed and Crude Oil Succeeded
In a continuation of our series on the state of the oil industry we look at some of the other ramifications of what we are labeling the Oil Renaissance in the US, and around the world for that matter. This phrase was first proposed regarding the potential Nuclear turnaround here in the US, where companies like NRG Energy, Toshiba and many more players all along the supply chain were positioning themselves for the Nuclear Renaissance of cheap, and abundant Nuclear energy for the next 50 years.
Well, the natural disaster in Japan changed that movement in the span of a week of just untenable radioactivity readings coming out of Japan. An already uphill battle for changing public sentiment towards the dangers of nuclear energy became an impractical fight from an investment standpoint that relied upon large DOE loan guarantees to attract private investment.
It is ironic, but all these companies spent a lot of time and effort from lobbying to developing strategic partnerships with each other, and in the end, most of that 7 year effort had to be written off by firms. It really shows how firms have to get the industry right; Oil was so much the smarter play. Higher margins, better technology, much easier safety hurdles, and even the environmental fight is much more manageable.
Not to mention the number of jobs created is far more with an Oil Renaissance as opposed to a Nuclear Renaissance, even with a complete buildup of the entire nuclear supply chain. Nuclear projects are just not scalable like oil projects are from a numbers standpoint due to the regulation, lead times for components, inspection, build times, and many more constraints.
No DOE Loan Guarantees: The Free Market at Work
We are going to have a Renaissance in this country, it just happened under everyone`s nose. The free market of high oil prices for the last 10 years made it happen all on its own without government subsidies, and part of the reason that things are going to get real tough for the alternative energy folks over the next 5 years as those government subsidies wind down. They will not make sense from an economic standpoint once oil prices come down considerably, and from a budgetary perspective we can no longer afford this propping up industries that cannot sustain themselves on their own merit in the free market. A 16 trillion dollar debt and climbing means the environmentalists will now be facing an uphill fight on Capitol Hill to have their cause funded by the American taxpayer.
Click here to read the entire EconMatters article "The New Era of Oil Renaissance, Where Nuclear Failed, Crude Oil Succeeded"
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Friday, December 28, 2012
SeaDrill [SDRL] Financial Calendar for 2013
Don't put that calendar away....Seadrill Limited [SDRL] plans to release its financial statements on the following dates in 2013:
February 28, 2013 - Preliminary fourth quarter and financial year 2012 results
May 31, 2013 - First quarter 2013 results
August 30, 2013 - Second quarter 2013 results
November 29, 2013 - Third quarter 2013 results
Please be advised that the dates are subject to change.
This information is subject of the disclosure requirements pursuant to section 5-12 of the Norwegian Securities Trading Act.
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February 28, 2013 - Preliminary fourth quarter and financial year 2012 results
May 31, 2013 - First quarter 2013 results
August 30, 2013 - Second quarter 2013 results
November 29, 2013 - Third quarter 2013 results
Please be advised that the dates are subject to change.
This information is subject of the disclosure requirements pursuant to section 5-12 of the Norwegian Securities Trading Act.
Get our Free Trading Videos, Lessons and eBook today!
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